The I.M.F. Sold 200 Tonnes to India, A New Announcement Due!

This is a snippet from a recent issue of the Gold Forecaster with Subscriber-only
parts excluded.

We have been prepped for this for so long now. It seems that the [concocted]
cloud from the expected I.M.F. gold sales has been a threat to the gold price,
for years. Now the clouds of speculation are being blown away and reality is
presenting itself in a way never expected. Part of this has been the expectation
that the I.M.F. gold sales would be dragged out over a long period. As we have
been telling Subscribers for an equally long period, we did not think this
would be the case, because the purpose of the sale was to maximize the proceeds
and quickly. Now with India taking 200 tonnes of the 403.3 tonnes, our position
has been verified.

India's Gold Purchase - The Facts: -

The announcement of the sale of 200 of the 403.3 tonnes of gold at an average
price of $1,045 is, we believe, the first of a minimum of two announcements that
will see the 403.3 tonnes completely sold.

The
Reserve Bank of India said the purchase was an official sector off-market transaction.
The transaction, which is being settled now, involved daily sales, phased over
a two-week period during October 19-30, with each daily sale conducted at a
price set on the basis of market prices prevailing that day.

The Reserve Bank of India may buy more gold from the International Monetary
Fund if it offers to sell the precious metal, a senior finance ministry official
said.

The total sales proceeds are equivalent to $6.7 billion. Payment is expected
to be in major currencies that make up the SDR. Please note that it will not
be made in just the U.S. $.

The Ramifications: -

The sales are establishing a good short-term average price, so as not
to leave the I.M.F. or India open to the accusation of selling too low
or too high. Inside India, gold buyers across the country have to be made
aware that their central bank feels these to be good prices. We expect
a pick-up in Indian retail buying because of this consequential feeling
of security in buying gold at these prices.

The R.B.I. will buy more "if it [the I.M.F.] offers to sell the gold".
So, either the I.M.F. is selling the gold in chunks [and not the whole
amount to anybody], perhaps offering it to a few central banks. Hence,
the Reserve Bank of India is waiting to see it the offers to others are
taken up. If they are not then it will pick up the refused amount. Perhaps
they will take the entire 403.3 tonnes.

If the amounts are refused by other central banks, it seems unlikely that
the public will hear of these refusals. So we expect either another announcement
saying India has bought the balance of 203.3 tonnes, in addition to the
first tranche of 200 tonnes, or that another central bank [China, Russia?]
has bought the balance.

Any concurrent/consequential sales being made by the I.M.F. are likely
to be announced very soon.

There seems little point to a sale being made anonymously now that the
India purchase has been announced, the cat is out of the bag. Add to that
the fact that central banks are buying gold has already turned the market
tide that for more than 25 years has expected central banks to be sellers.
Officially, publicly, they are buyers now.

Most people expected China or Russia to be the buyers, because they have
been buying gold in the open market for years now. The announcement that
India has bought so much and is prepared to buy more now enlarges the list
of central bank buyers. This action speaks far louder than words. Since
then Sri Lanka has said it is buying gold for its reserves [although only
a guessed amount of 5.3 tonnes. Who next?

Gold
has a firm place in the monetary system,[as a reserve asset, not a means
of exchange] in the face of an unstable monetary system, that is still
decaying. This purchase expresses that sentiment, at central bank level.

The shape of market demand will and is already broadening to include major
institutions. Their appetite has a huge capacity, so traditional gold demand
may well be pushed to one side as they buy what they want. This will be
at current or higher and possibly much higher prices.

Overall impact on the gold market and its priceFor Subscribers only! We are sending out a review of the
gold market to Subscribers only, which reveals why the gold price is being
held well above $1,000, where it will go next and how the gold market has
changed shape due to the changes in overall central bank policies, from selling
gold to buying gold.

Gold Forecaster regularly covers all fundamental and
Technical aspects of the gold price in the weekly newsletter. To subscribe,
please visit www.GoldForecaster.com.

"Global Watch: The Gold Forecaster" covers the global gold market.
It specializes in Central Bank Sales and details, the Indian Bullion market
[supported by a leading Indian Bullion professional], the South African markets
[+ Gold shares shares] plus the currencies of gold producers [ Euro, U.S. $,
Yen, C$, A$, and the South African Rand]. Its aim is to synthesise all the
influential gold price factors across the globe, so as to truly understand
the global reasons behind the gold price.FIND OUT MORE

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